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Emily D. Swoboda

McDermott Bill Riding on Slim Chance, Lawyer Says

18 July 2008

A plan to direct $40 billion from Internet gambling revenues to new social assistance programs in the United States has been introduced this week in Washington, D.C., but one legal observer said the idea is not enough to win over the opposition.

"Tying national-level approval of Internet gambling to the Social Security system is not necessarily a winner," Martin D. Owens Jr., a California lawyer who specializes in Internet gambling, told IGamingNews in an e-mail. "The current Washington fantasy is that Social Security doesn't need fixing (until next time, anyway)."

Representative Jim A. McDermott, Democrat of Washington, on Tuesday introduced H.R. 6501, the Investing in our Human Resources Act.

The bill proposes a plan to sponsor programs in each state for people in declining economic sectors and children in foster care through new revenue generated by legal and regulated Internet gambling in the United States.

Mr. McDermott said the plan has the potential to bring in $40 billion over 10 years.

The bill, a revision of sorts to Mr. McDermott's Internet Gambling Regulation and Tax Enforcement Act of 2007, would set up a trust solely funded by taxes from Internet gambling companies licensed and regulated in the United States.

The trust would be overseen by the Treasury Department, which would allocate funds to each state's program.

However, Mr. McDermott's plan is contingent on whether the United States government decides to regulate Internet gambling, and so far there has been no indication of that happening in the near future.

A handful of bills were introduced in Congress over the last year, relating to the licensing and regulation of Internet gambling in the United States, but none has succeeded in making it beyond a committee mark up.

And last month, a House committee voted down a bill to clarify the Unlawful Internet gambling Enforcement Act of 2006.

Barney Frank, Democrat of Massachusetts, and Ron Paul, Republican of Texas, in April introduced HR 5767, which sought to block the Federal Reserve Board and the Treasury from finalizing the regulations for the Unlawful Internet Gambling Enforcement Act.

HR 5767, the Payment Systems Protection Act, was voted down despite the fact that both the Fed and Treasury admitted in a House committee hearing in April to having difficulty writing the regulations due to ambiguous language in the act. In other words, the act contained no clear definition of Internet gambling.

Mr. Owens does not believe that Mr. McDermott's new bill will do anything to attract additional support for I-gaming regulation, which has drawn strong opposition since efforts began in April 2007 with Mr. Frank's Internet Gambling Regulation and Enforcement Act.

"There is sure to be strong opposition from the usual suspects," Mr. Owens observed. "The states will not look favorably on anything that takes away their exclusive jurisdiction over gambling."

Mr. Owens believes legal Internet gambling in the United States will begin at the state level.

"Blocking at the national level is just too easy," he said.

Besides criticisms of the idealistic nature of Mr. McDermott's bill, the National Council on Problem Gambling has concerns about another element of the bill -- a provision to establish a national responsible gambling program called the Safe Internet Gambling Practices Program.

Under the Safe Internet Gambling Practices Program, a separate trust would be created through resources from the Transitional Assistance Trust Fund. The money would be allocated by the Secretary of Health and Human Services for the promotion of responsible Internet gambling and awareness of unsafe Internet gambling practices.

Keith Whyte, executive director of council, thinks the responsible gambling program is a good step toward the recognition of safe Internet gambling, but he still has questions.

"It's not clear how much money would ever flow," Mr. Whyte told IGN in a telephone interview. "It seems like the lion's share is going toward other (programs) and because there's no defined contribution, it could end up being $100."

Mr. Whyte said he would like clarification on the program's intent.

"If the intention is to be a robust nationwide extensive program to reach out to every kid that has access to the Internet, then that's great," he said.

Mr. Whyte's biggest concern is what the program lacks, and that is a proactive solution to problem gambling.

"Though this at least has, theoretically, some money going towards it, it still seems undefined and it's solely about public awareness or at best prevention," he said. "It still doesn't help create a service-delivery system to actually help anybody with the problem. It's incomplete and we know that as a big public health issue it needs more than that."

Social welfare is one of the foundations of Mr. McDermott's congressional career. He chairs the House Subcommittee on Income Security and Family Support, and is active in health care reform issues, especially for those in low-income areas.

"I took this up because I'm looking for money to deal with aging foster kids and kids who don't have health care and don't have housing and they're 17 or 18 years old and they're out in the street and they're homeless," Mr. McDermott told the Las Vegas Review-Journal on Thursday.

He also admitted to the paper, however, that he does not think HR 6501 will pass during this session. But, he said he does plan on resubmitting it in 2009.

Click here to view a copy of HR 6501.

McDermott Bill Riding on Slim Chance, Lawyer Says is republished from
Emily D. Swoboda
Emily D. Swoboda